Australia's financial advice industry is heading for something of a perfect storm. Compliance overheads are up, adviser numbers are down, later life advice requirements are skewed towards complexity and there are proportionally more later life Australians.
Financial advice during our earning years should be simple. Choose a super fund, pick a diversified high growth option, contribute consistently and stay invested through 35 to 45 years of compounding. Check it once a year at most, then get on with your life until retirement looms and you see where you're at.
Then the complexity begins
Retirees face decisions far more complicated than investment selection. Retirement income sustainability, tax optimisation, Age Pension eligibility, estate planning, intergenerational wealth transfer, aged care funding and surviving spouse outcomes all require specialist professional advice. Advisers deliver their greatest value here, and it is not the kind of service you are going to get from your life-long super fund's 1800 number. I am not seeing the required armies of specialist advisers being added to the super fund's rosters.
Demand for retirement advice is accelerating. Australia now has around 4.5 million retirees, with roughly 150,000 more transitioning into retirement every year. The superannuation system has expanded from $3 trillion in 2019 to more than $4 trillion today, and the proportion of Australians aged over 65 continues to rise.
These are strong demand side influences.
But industry capacity is moving in the opposite direction
The number of licensed advisers has fallen from almost 29,000 in 2019 to just over 15,000 today, a decline of nearly 50 per cent. The industry has higher education standards, stronger governance requirements, improved consumer protections and increased regulatory oversight, which means much more work is required to reach a position where high-quality compliant advice can be offered.
These are pretty strong supply side headwinds.
The administrative burdens have gone a little haywire. Royal Commission reforms have lifted standards, but they have also increased documentation, audit evidence, compliance reporting and governance requirements. These changes have been necessary and fundamentally positive for consumers, but they have added a lot to the time and cost of producing advice.
Outsourcing planners to a low-cost employment regime reduces the unit cost of advice, but the prolonged availability of unit-cost arbitrage buys you some time and does not change the game. Year 2, you are looking for productivity improvements.
This is a pretty profound structural imbalance. More Australians are retiring. Their decisions are more complex. Compliance obligations continue to expand, yet adviser numbers have halved.
Economic theory says increase the adviser supply. The theory would see them being paid more, see more entrants into the market and their collective lot becoming more attractive. The return to a balance in supply and demand forces is not happening fast enough or even noticeably.
Economic history shows that something always has to give, and technology likely has a critical role to play here, the ubiquitous AI dividend. We would argue not by replacing human judgement though, but by automating the administrative and governance heavy processes that surround advice production.
Every hour removed from documentation, audit trails and workflow management is an hour returned to helping clients with the most important financial decisions of their newly complicated later lives.
How BackPro Expands Advice Capacity
This is exactly the constraint BackPro solves. It turns a Statement of Advice into a 30 minute workflow.
BackPro does not replace advisers and workflow supporters. It removes the drag weight around them through automation:
- SOAs in minutes, fully evidenced, consistent and audit ready
- Automatic audit trails, every data point, recommendation and model interaction logged without extra work
- Compliance ready documentation, templated, standardised and aligned to internal governance
- Workflow compression, the administrative steps that normally take hours reduced to a single governed process
BackPro increases the advice per adviser output without compromising security, governance, quality or explainability.
